ABSTRACT
Cargo insurance has played a vital role in international trade since the development of carriage of goods by sea in the early nineteenth century. A key feature of the contract for international sale of goods is that the risk passes on or as from the shipment and the seller is not responsible for the loss at sea.2 If anything goes wrong after the risk has passed, the buyer who has no physical control over the goods but has paid for them will rely heavily on the carriage contract and the insurance contract to compensate its loss. It is also well recognised that the international sale of goods is essentially a documentary sale (i.e. the seller symbolically delivers the documents representing the goods to the buyer and gets payment even before the goods have physically arrived at the destination). Since the bundle of documents passed by the seller is going to provide the security guarantee to the buyer, the buyer is confident to pay for the documents and expect the contractual cargo or at least reimbursement if the cargo has been lost or damaged. Under c.i.f. and c.i.p. terms,3 the seller is not only obliged to insure the consignment as agreed in the sale contract, but also to tender the proper insurance documents to the buyer, so that the buyer will be able to recover the amount of its loss from the underwriters.
